According to the Department of Health and Human Services (HHS), an American who is 65 or older has a 70% chance of eventually needing long-term care. In many cases, New York residents and others will use Medicaid to help defray the cost of going to a nursing home or paying other medical bills. However, Medicaid is only available to those who have $2,000 or less in available assets.
Furthermore, individuals who attempt to sell or transfer assets to reach the $2,000 threshold may be disqualified from using the program. One way to get around this rule is to transfer assets to a spouse. While Medicaid may attempt to obtain payment from the person who the assets were transferred to, he or she will likely pay a discounted rate. In some cases, the government won’t seek any payment for services rendered.
Fees that are paid to caregivers may also allow a person to deplete his or her assets in a strategic manner. It is important to keep careful records of the hours that a caregiver worked, the services rendered and how much that person was paid. Friends, family members or others who provide care must be paid at a fair market rate, and the amount of a lump sum payment must be based on a person’s remaining life expectancy.
Making use of Medicaid planning strategies may help a person preserve resources that might later be transferred to a family member, friend or charitable organization. A legal representative may be able to explain how to create a trust or otherwise keep assets from being seized by the government to help cover medical expenses. In some cases, placing assets in a trust may have other benefits such as helping an estate avoid probate or reducing an estate tax bill.